Correlation Between Hartford Growth and NORFOLK

Can any of the company-specific risk be diversified away by investing in both Hartford Growth and NORFOLK at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Hartford Growth and NORFOLK into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Hartford Growth and NORFOLK SOUTHN P, you can compare the effects of market volatilities on Hartford Growth and NORFOLK and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Hartford Growth with a short position of NORFOLK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Growth and NORFOLK.

Diversification Opportunities for Hartford Growth and NORFOLK

-0.52

Correlation Coefficient

Hartford Growth  NORFOLK

Excellent diversification

The 3 months correlation between Hartford and NORFOLK is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Growth and NORFOLK SOUTHN P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORFOLK SOUTHN P and Hartford Growth is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on The Hartford Growth are associated (or correlated) with NORFOLK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORFOLK SOUTHN P has no effect on the direction of Hartford Growth i.e., Hartford Growth and NORFOLK go up and down completely randomly.

Pair Corralation between Hartford Growth and NORFOLK

Assuming the 90 days horizon The Hartford Growth is expected to generate 0.41 times more return on investment than NORFOLK. However, The Hartford Growth is 2.42 times less risky than NORFOLK. It trades about 0.16 of its potential returns per unit of risk. NORFOLK SOUTHN P is currently generating about -0.02 per unit of risk. If you would invest  5,980  in The Hartford Growth on September 23, 2024 and sell it today you would earn a total of  708.00  from holding The Hartford Growth or generate 11.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	64.62%
Values	Daily Returns

The Hartford Growth  vs.  NORFOLK SOUTHN P

Hartford Growth

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Growth are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Hartford Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NORFOLK SOUTHN P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NORFOLK SOUTHN P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NORFOLK is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hartford Growth and NORFOLK

The main advantage of trading using opposite Hartford Growth and NORFOLK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Growth position performs unexpectedly, NORFOLK can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in NORFOLK will offset losses from the drop in NORFOLK's long position.

The idea behind The Hartford Growth and NORFOLK SOUTHN P pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.